US bond yields rise ahead of employment report

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Por Ross Kerber

Aug 5 (Reuters) – U.S. Treasury yields rose on Thursday as sentiment improved after an encouraging report of jobless claims, a day before more detailed labor market data was released. .

* The 10-year benchmark paper return rose 3.8 basis points to 1.2219%.

* Labor Department figures showed initial claims for state unemployment benefits fell last week, while layoffs fell to a 21-year low in July as companies kept their workers amid a labor shortage. .

* Stock indices rose after the report and bond yields appeared to move in parallel, said Subadra Rajappa, head of US rate strategy at Societe Generale, citing “an improvement in overall risk appetite.”

* The pace of job creation will be a key indicator for US Federal Reserve officials to decide how quickly to reduce bond purchase programs, which have propped up markets during the COVID-19 pandemic.

* Central bank officials want to see companies add between 500,000 and 1 million jobs a month so they can announce the start of a reduction later this year, Rajappa said.

* The trade raised a closely watched portion of the US Treasury yield curve that measures the difference between the yield on two-year and 10-year Treasuries, seen as an indicator of economic expectations. The spread stood at 102 basis points, about 2 basis points more than on Wednesday.

* The yield on 10-year inflation-protected Treasuries stood at -1.102%, after hitting a record low of -1.216% on Wednesday. The 10-year TIPS inflation rate stood at 2.327%, lower than Tuesday.

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